Indianapolis Bans New Data Centers Until 2028 as Backlash Spreads

Indianapolis has joined several other cities and states in pausing or restricting construction of new data centers.

The Department of Metropolitan Development, which serves both Indianapolis and surrounding Marion County, approved a measure to pause construction of new centers until the end of 2027.

This is just a few days after Pennsylvania Gov. Josh Shapiro signed new restrictions against "speculative, irresponsible" data center projects. Several other cities including Greensboro, NC, and Chesapeake, VA, announced their own restrictions.

They're part of a growing backlash against the large industrial projects that are increasingly coming to American neighborhoods, bringing worries of noise, pollution, and demands on power and water along with them.

The Metropolitan Development Commission said the moratorium will allow it time to further study how to integrate such projects into the city without harm on its existing infrastructure.

"The moratorium provides time for additional community engagement, technical research, and the development of reasonable and responsible zoning regulations for data center users," it said. "During the moratorium period, applications for land use or permitting approvals necessary to establish a new data center use will not be processed or approved."

The explosion of data center projects has brought dozens of proposals nationwide. They've also become a major political issue.

Cities are responding in their own ways. New Orleans is creating new zoning rules for data center development. Ohio is studying how a tax break for purchasing data center equipment gave away billions in tax revenue. Virginia is requiring they pay for dedicated electric infrastructure.

Persistent questions

Indiana is host to about 125 data center projects completed or under construction, according to Data Center Map, which tracks the industry nationwide.

Of those, 48 are in the Indianapolis region. Indiana University estimates that within a few years, the data center projects in the northern part of the state alone will require more power than all the households now in the state.

Realtor.com® recently studied the impact of the largest 50-gigawatt data centers and found many are being built farther into rural areas than in recent years.

While the study found that data centers initially reduce property taxes, they can later rise. The research doesn't show a strong correlation between data center development and home values in the two years after the new facilities open.